Retirement should be a time to relax, not worry about money. But for many pensioners relying on the state pension, that’s not always the reality.
The Department for Work and Pensions (DWP) offers help in the form of Pension Credit—a top-up benefit designed to boost the income of those on a lower state pension. However, there’s a catch that many aren’t aware of: the £10,000 savings rule.
If you’re over this threshold, you might be getting less than you expected—or nothing at all.
Threshold
Let’s start with the basics. Currently, the full new state pension (for those who reached retirement age after April 2016) is up to £230.25 per week. If you’re on the old basic state pension, the max you can get is £176.45 per week—that’s a big difference.
To fill that gap, Pension Credit steps in. It boosts your income up to £227.10 per week, but only if your weekly income and savings meet certain limits.
Here’s where it gets tricky.
Savings
Many pensioners are surprised to learn that if you’ve got more than £10,000 in savings or investments (excluding your main home), it starts affecting your Pension Credit eligibility.
For every £500 over £10,000, the DWP assumes you’re earning £1 extra income per week. Sounds small? It adds up fast.
Let’s break it down:
| Savings | Assumed Weekly Income |
|---|---|
| £10,000 | £0 |
| £11,000 | £2 |
| £15,000 | £10 |
| £20,000 | £20 |
| £30,000 | £40 |
| £110,000 | £200 |
So if you had £110,000 in savings, the DWP would treat that like earning £200 a week. Add that to a £176.45 pension, and you’re well over the threshold to claim Pension Credit.
Impact
Stephen Lowe from Just Group put it bluntly: this rule feels unfair. Why? Because many pensioners aren’t living lavishly—they’re just trying to keep a rainy-day fund. Emergencies happen, and having £10,001 in savings shouldn’t suddenly make someone ineligible for a lifeline like Pension Credit.
Even worse, the £10,000 threshold hasn’t changed since 2009. With inflation rising and costs spiraling, that fixed cap means more people are losing out just for trying to stay financially responsible.
Exceptions
There are some silver linings. Not all income counts towards Pension Credit eligibility. Attendance Allowance, Personal Independence Payment (PIP), and Disability Living Allowance are excluded. Also, things like adoption or fostering allowances and certain Scottish benefit supplements don’t count.
Plus, starting this year, you no longer need Pension Credit to get the Winter Fuel Payment. That’s great news for those just over the £10k limit who would’ve previously missed out.
Still, be cautious—a new £35,000 threshold applies for the Winter Fuel Payment. That includes income from savings. So, if you earn over that, you might still lose out on the £200–£300 winter support.
Planning
So, what can you do? If you’re nearing retirement, it’s worth reviewing your savings strategy. Having too much set aside could actually cost you income in the short term.
Some retirees might choose to invest in home repairs, prepaid funeral plans, or even spend on quality-of-life items to bring their savings below the threshold—without being reckless, of course.
You should also regularly check your eligibility for Pension Credit, as it can unlock other benefits like help with Council Tax, free TV licences (over 75s), and even free dental treatment.
Don’t assume you won’t qualify—it’s worth checking every year.
Being aware of the savings rule and planning around it could mean hundreds or even thousands more in support over your retirement. Knowledge is power—and in this case, it’s also money.
FAQs
What is the £10k savings rule?
If you have over £10,000 in savings, your Pension Credit is reduced.
How much is full new state pension?
£230.25 per week if you have a full NI record.
How does DWP calculate savings income?
Every £500 over £10k = £1 extra weekly income assumed.
Are all benefits included in income?
No. PIP, Attendance Allowance and similar are excluded.
Can savings affect Winter Fuel Payment?
Yes, if your income plus savings exceeds £35,000.
